Astral Limited (ASTRAL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Astral Limited Q2 FY 2024 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Arun Baid from ICICI Securities. Thank you, and over to you, sir.

[Audio Gap] Q2 FY '24 result con call. From the management side, we have Mr. Sandeep Pravinbhai Engineer, Chairman and Management Director; Mr. Ken Engineer, ED; and Mr. Hiranand Savlani, ED and CFO. Now I hand over the call to Mr. Sandeep Pravinbhai for his opening remarks, post which we'll open the floor open for Q&A. Over to you, sir.

Thank you. Thanks, everyone, for joining the earnings call of Q2 FY '24 and the first half of FY '24. First of all, I am happy today to share this year Astral is celebrating its 20th anniversary. This was full of legacy of innovation, connectivity, brand building, wide distribution network creation, creation of reach in every corner of India and strong -- building a strong production capabilities across the country. We started the journey of CPVC pipe manufacturing. And today, we can proudly say that we are a building material company, having 4 different verticals and thousands of SKUs in different verticals. Astral started its journey in 1998 in the same month of October with single product and single focus to bring CPVC to India. And today, we can say with pride that we are the first one to bring CPVC to India. The first one to make CPVC a product which can replace and which replaced the metal piping, and we have created a history of CPVC for 25-year of our presence in this country and growing and now multiple manufacturers are joining to make CPVC products. As you are well aware, the market situation continues to be volatile. The polymer pricing and the chemical price situation, which is continuously having -- going up and down, but slowly, the PVC prices are now settling down, and CPVC prices of this quarter were also come to a level where it has settled out. But this all chemical fluctuations are the challenges of margins and various growth aspects of the market. But I'm very happy that with all these challenges and volatility, we at Astral are always trying to mitigate these challenges and deliver a consistent performance on a yearly basis. The result of this is in front of you. Once again, we are able to be able to deliver a teamwork and we have worked on once again with this volatility also and to give you a volume growth of 25% plus and in the second quarter in a row. In this scenario is very robust. And seasonally, in the first 2 quarters, which is loaded with PVC product demand with agriculture and certain [indiscernible] sites. In spite of that, our CPVC growth was excellent. During onward trend of polymer, we also know the distributors always lease stock their product and the material. Despite of that, we are able to grow and maintain our margins of 18% plus EBITDA after adjustment of sanitary and faucet [indiscernible] CPVC inventory loss. Coming to the pipe business. Due to the robust demand in pipe verticals, company has decided to aggressively move into expansion of its capacity. As communicated earlier, we are putting up 3 new plants and all are going to be as per schedule. Guwahati 22,000 electric tonne plant already started production of water tank and shortly, we'll start production of pipes. Astral's 70,000 metric tonnes and 50,000-metric expansion activities are going up going on in full swing at this plant. As communicated earlier, we have increased our capacity within our existing plants to a tune of 20,000 metric tonnes, which is up and running. At present, our capacity has increased from 2.9 less metric tonnes to 3.9 metric tonnes. Here are a company which can proudly say that we are the first company and at present the only company who get NSF certification, the highest certification come from United States now which also is considered very prestigious and important in India for our water tank [indiscernible] in the market at present are NSF India. So our whole water tank are safe to handle drinking water, when water is stored there and consumed by human beings. With NSF certification our dam and activity centers, which is safe for consumption of water by open drink and without telling victim or without any obligation from the water. We are also a first one to get the ISI Certification [indiscernible] question-and-answer sessions. And our fire parking system is getting approvals and acceptance very fast in the market and the business is building up in high value and volumes. For our additive spot business, our state-of-art planted by this, which have got all the permissions, also the gas connections who run the plant is up and running. And the production capacity at [indiscernible] is huge, and it will be fully operational in the next 2 quarters. And as we plan, we'll make our major products of box cities and white blue and other adhesive products at the rate, and we will reduce one production facility in Tanu in next 2 to 3 quarters. And all these production capacities will be moved to -- mostly to [indiscernible]. And so one location will be in some kind of. Our volumes are continuously growing in high double digits. And now the chemical prices have settled down and are stable. So we are getting good support of margin and consistency of the business in [indiscernible]. Both our U.K. and India businesses are forcing a good growth in coming years, and we are very positive on the business outlook for the [indiscernible]. Paint business. In paint business, we -- as we communicated in the last call, we are passing through some changes, some keeping problems. SAP is completely implemented now. A lot of KYCs are done for the counters or the retailers who we sell. Our systems are in place and the systems are settling down, and we are seeing improvement in sales compared to the last quarter. And now we will see further improvement with growth in the coming time. And our team has started taking charge of that business, and you will see a lot of improvement in coming 2 quarters for the paint business. And in next coming 2 quarters, the pain business will show a positive growth number and a growth number also. And there will be strategies to launch the paint under the Astral program shortly and which will be communicated in the coming 2 quarters, within 2 quarters, and we will be opening many new geographies of India, with launching northern plant paint products. Sanitary and faucets, I'm very happy to announce that our team has achieved a first milestone of getting 500 stores where in our display is placed. And all these stores have started selling the product to the end consumer, we have completely tracking the tertiary sales. So for me, selling to actually user and to the client, the tertiary sale is very important, and we are getting good response from our product line. The product line is growing. We have reached an average of INR 6 crores, by the last 2 months. Last month, we have been averaging around INR 8 crores plus, and I'm sure that in next 2 months, we will be crossing our breakeven number of INR 10 crores plus, and we will continue our growth. Lots of new product SKUs are getting accepted in the market. You can clearly see that forthcoming times, we'll be really good for our brand Astral in the vertical. As we have worked very hard to build the brand Astral and the brand Astral itself is a big thing to pull a lot of our product lines and to make them reach to the consumer with price and with the plan, except brand power. To summarize, all verticals are doing good. We are going as per our plans, and we don't see any much challenge in the market, and we'll keep giving our consistent growth for our company as it is known for and as we have always communicated. Now I hand over to Mr. Hiranand Savlani, our ED and CFO, for his opening remarks on the numbers and then myself, Arun Baid and Kairav will answer all your questions. And once again, thanks for joining the call and trusting Astral. Thank you very much.

Good afternoon, everyone. Thanks for joining this conference call. I will take you through the few key numbers of this quarter and then at we go to the Q&A so that we can spend more time on the Q&A side. The revenue numbers are in front of you. This quarter, we have grown 16.3% in a consolidated wage. EBITDA growth was very high compared to the last quarter or even compared to the last year also. And in percentage term, it was 17.1% compared to last year's similar quarter was 13.2%. Now if you break up this consolidated number, then I think pipe, that is a plumbing, which includes the sanitary where in plastic also, which is roughly about INR 17 crores, INR 18 crores a piece. The value growth was around 17.3%, and volume growth was close to about 28%. And the EBITDA growth was around 57% and the percentage from EBITDA was 18%. So we have guided that we will be working in the range of 16% to 18%. So I'm very happy to say that we are on a higher side of what we have guided. And not only that, if we do the adjustment of inventory losses of CPVC to the tune of INR 20 crores and roughly about INR 4 crores a piece loss of the pathway, then the adjusted EBITDA will be even much higher. Now coming to the further breakup of our this as vendor sealant business, Adhesive Business of India has grown by 18% in value terms, and EBITDA was roughly about 15.5%. Adhesive business in U.K. grown by 17% and EBITDA was roughly about 10%. Paint business, which was around negative 6% and EBITDA of 16%. These are the key numbers, and now I will take you through the few highlights of this quarter. This is the second consecutive quarter where we were able to deliver 25% plus volume growth of our core piping business in spite of having a very high base last year, if you can see the last year number also, you can see that our base was not low in the last year also. And that's why we have given in our press release, the last 4 years, CAGR growth also. The demand there is excellent, and we are expecting the coming quarter also demand should remain positive, mainly due to good announcement of new projects by a lot of developers, low polymer price, both CPVC as well as PVC. A lot of infra spending is increasing, and we are seeing a good growth in the housing side also. Across the board where we are seeing the citywide data, every -- most of the good cities are touching the new pipe. Most of the cities of India is having good construction activity and demand is coming from across all the 4 zones of countries. And our new locations are giving very good healthy volume growth, than originally we planned. So we are very, very excited with the performance of not only our new location that is the Easter, but we are very happy with our new product growth such as paint, wall, drain proofs, Silencio and now Bathware also. As you all are aware that the CPVC prices are on a lower side, and we have to also pass the price reduction to the market. And due to that, our realization has dropped compared to earlier quarters. We have to incur approximately INR 20 crores of loss on inventory and our volume is highest in the turnover. The effect on the inventory is high on our company. But in spite of that, we were able to deliver a very healthy top line volume and EBITDA margins. We have always communicated that Astral is always believing in consistency in performance. And you can see in this quarter also that in spite of inventory loss in security, our margins were healthy, and our volume growth was excellent. We have not compromised our margin in spite of 28% robust volume growth in this quarter and high loaded PVC volume also. Our gross profit margins were highest in the last 4 years. We were having EBITDA margin guidance of 16% to 18%, but we believe have over surpassed this number. And we are expecting that from the coming quarter, the polymer prices are more or less going to bottom out. We are not seeing much growth from here on. A little bit may happen because we -- it is very difficult to predict the number, but it looks that now the seasonal quarters are starting seasonal months are starting in India. And historically, also in a seasonal quarter, the demand is high, so the prices will not fall. So we are expecting maybe a little bit upward revision of the pricing in the coming side. And if that is going to happen, that then may be a conversion of inventory gain in the coming quarters. Of course, Q2 will be a little pressure because of the PVC, which had dropped in the first 15 months -- 15 days of the month of October. Looking to the first half of performance of 29% volume growth and lower price polymer we are increasing our guidance from 15% to more than 20% volume. That means minimum 20% plus volume growth for the full year. So we will try even more than 20% also. Since our Guwahati plant has started paying products and shortly, we are going to start the pipe also, we are expecting some support from that location also in the second half of the current year. We are putting up 22,000 metric tonne capacity in Guwahati. During the first half, as Sandeep communicated, we have increased our capacity within our existing plant to the tune of 20,000 metric tonnes. So our capacity has increased from 290,000 metric tonnes to 300,000 metric tonnes. Indian operation of our Adhesive business has delivered a very, very healthy, not only volume growth but value growth to the tune of 18%. U.K. has also delivered both volume growth and the value growth. Value growth is to the tune of 17%. EBITDA margins are also very healthy our in Indian operations closed about 15.5%. And U.K. was 9.7%, a little lower than what normally they deliver 11%, 12%. But we are expecting that this margin to improve further from U.K. in the coming quarter because now whatever the high cost inventory there almost on the word go completion. Paint business has shown a good recovery compared to the last quarter. You can see that last quarter was around INR 40 crores, INR 41 crores. This quarter is around INR 47 crores and a very healthy EBITDA of 16%. On Y-o-Y basis, we can see there was a drop of 6%, but we are confident that in the coming quarter, we will improve that because now we are settling down with our new systems and processes and SOPs and the SAP implementation. So that, I think, mostly our team is getting accredited and the new Gem Paint is also getting accredited with the new system. So we are expecting that it is going to give us a very, very good results in the coming years. We have successfully implemented SAP. We are confident that we will come into growth rate shortly and now more clear visibility of the data is there that is helping our team in the transparency within the 2 teams and as communicated and as per our agreement, we are going to complete the 80% stake in the game page in this month itself. That is in the month of October itself. So you will see that now our full flat team will be there in the [indiscernible] also. A lot of work is going on in the business as Sandeep communicated at the back office level, we will see the benefit in the coming quarter in terms of system improvement, in terms of branding, in terms of HR activity, in terms of sales and marketing into the paint business. Bathware has communicated. Last quarter, we are slowly improving the performance in the sales number. I'm happy to share that last quarter, we have done a sales billing of INR 18 crores or approximately a run rate of INR 6 crores a quarter. Last month was very heavy, close to about INR 8 crore. That is a September month. And we are expecting that it will improve further in the coming time. If I can correct a little bit what Sandeep communicated, we are shortly going to close the INR 10 crore plus run rate. So instead of 2 months, within 2 quarters, we are going to cross the INR 10 crores plus run rate, and we are going to achieve breakeven as early as possible. So hopefully, in the first quarter or second quarter, definitely, we will be into the breakeven side. Now to summarize all the 4 verticals, we are very happy with the performance, and we are confident that this growth momentum will continue, and we will keep working hard to gain the market share and last but not least, that our core vertical, that is pipe, you can see that in spite of higher base, we are still gaining the market share. And with branches getting more and more stronger will gain more and more market share in the coming times because we are adding a lot of new geographies in terms of manufacturing facility, which will help us to grow market share and reduce our credit cost. Now I'm opening up the floor for a Q&A session. Thank you all very much.

[Operator Instructions] The first question is from the line of Shubham Agarwal from Axis Capital.

I just wanted to reconfirm the inventory loss of INR 20 crores, right? And there's no inventory loss in PVC from this quarter. The whole inventory on PVC will come in October.

So in fact, PVC was some gain in the beginning, but because what happened that in the last month of September, everyone has to give the price protection to the market. Okay, because Reliance announced the price protection. So in the day of October, the price dropped by INR 4. So because of that, we have to pass on, give the credit down to every distributor. So whatever some gain we get that was wiped out because of this protection which we have given to the market. Otherwise, there was a slight gain in the beginning of 2 months. So now this gain -- loss is purely because of the CPVC.

Okay. Second, just on some on the growth, I had a question. So we've seen that the government CapEx has been -- has been really front ended in H1 of this year given the big elections are coming around. So I just wanted to take a sense of you. Do you expect any growth to slow down going into Q4 of FY '23 and Q1 of FY '25? Yes, that's the question.

So I don't think it is going to affect too much because of the election. The reason is very simple that our company's dependency on government projects is very, very thin, except REX product that is a double-wall corrugated that is related to the government projects. And that, too, we have converted sizable business of racks also into the private projects. Because our forte is more on the private side of the business than the government side of the business. So I don't think it is going to affect a big way to our company because our dependency on the government pay is very low.

Understood. And congrats for the good volume growth that you've been delivering.

The next question is from the line of [ Vineet Shah ] from [indiscernible].

I have 2 questions. First one is that since you have already done 29% volume growth by in Plumbing segment in the first half of financial year going forward. even [indiscernible] 16% Y-o-Y growth in quarter 4 financial year '24. Will it you bring your volumes to almost 63 metric tonnes. So assuming 30 by 4, like 75,000 tonnes of production capacity per quarter will bring your utilization capacity to around 85% level, which is much higher than normal levels of 65% to 70%. Is it possible to achieve this kind of utilization of machines given shorter changeover time of fittings, et cetera? Or am I missing something? And resin, I have yes. Okay. Please go ahead.

Yes. So see, capacity right now, our utilization is around 67%, 68%. And we have recently added 20,000 metric tonnes within our internal plans and 22,000 Guwahati is almost on the verge of completion. Bank has already rolled out and prices are going to be rolled out shortly. And there is still some scope available in our existing capacity, whereby we can further add 10,000 to 15,000 metric tonne if required, okay? We have to end the machines only. So we will see -- evaluate the situation on the ground. And based on that, we will take. And next year anyway, in the second quarter, or this Telangana plant will be up and running. So I don't think we have any problem as far as the capacity is concerned. Secondly, we are always sitting on a reasonable inventory levels also. So even if particularly the last month of the year, marked some extra demand comes, then we can reduce a little bit to our inventory because anyway, Q1 is slow. So we can readjust that also. But I don't see any problem into capacity. We have enough capacity to take care of whatever the demand. Even 30% kind of volume will come and then also we will be able to manage. That's what we have done an internal working.

Okay. And then one question, like what is the maximum possible utilization that you are assuming? Is it like 85% possible or we will stay around 80% itself?

Yes, 85% is possible because more and more utilization will increase, the same machine will manufacture the same die pipe. So naturally, 85%, we can reach back.

Okay. And I have a second question on CapEx. You have guided a CapEx of like INR 30 crores for financial year going forward, right? So while your half yearly cash flow statement indicates almost INR 300 crores is already done. So second half of financial year '24 CapEx is that's like INR 50 crores. So is there any revision in the CapEx? Or are you going ahead with 50%?

So CapEx will increase to the tune of INR 75 crore additional because there is a land which we acquired for the corporate house, which is near to our existing premises, okay? So there, we have spent INR 70 crores. So that is the additional CapEx, which was not originally planned because we were getting the land very near to our existing corporate house, which is very, very difficult to get otherwise, we have to select the other locations. So we have recently acquired that land. So that's why that is the additional CapEx.

Okay. So on and on, it will be like 300 already done, 50 pending and 75 more?

I think 280 we have done and the balance will be in the second half.

The next question is from the line of Keshav Lahoti from HDFC Securities.

Just wanted to get a sense how is the channel reacted to the sharp rise on the side. So we expect some challenge to stocking.

Sorry, I could not hear your question.

Destocking right? So my question was there has a sharp cut in rating prices in October. So how is the channel reacting -- are they start to...

Right now, I think PVC has mostly bottomed out. So the price drop that came, it came very rapidly in a span of 11 days. There were 3 major drops. So around INR 11 price of PVC had dropped. But general is still mine, there is no destocking as such. People were expecting this sort of a price drop in September and hence, all the major player has given the price protection also. So the first price drop was already supported by the manufacturers. So the second 2 price drops basically came in a very fast duration. And at that time, the channel inventory was not at its peak. So I don't think there has been a major issue with regards to dealers losing out in -- because of these price drops. And now I think globally, PVC has bottomed out, and everyone is well aware that from here onwards, PVC will only see an upward journey going ahead. So globally also, internationally also, we are seeing that PVC has bottomed out and stabilized at this level.

I think I can add to what Savlani said that the September, you are right, there was some destocking from the distributor side because everyone was expecting there is a drop in the polymer price because international price was low, but India price was higher. So September, there was a destocking. But I think now quickly in 11, 12 days that drop [indiscernible]. So again, we are expecting that the channel will refill in this couple of weeks or 3 weeks' time.

In your understatement what was the reason for the sharp percent rising prices?

Import level, the international offers were lower than the Reliance offer. So Reliance had -- and the local trader we're also putting at a lower rate than the reliance pricing. So eventually to match the international level and the local trader level, the Reliance had to do the price shortcuts.

Any idea about what would be the volume growth on the SE segment side?

It is very difficult to give a volume number because there, we are selling different chemistries, some are solid, some are liquid, some are in a gel form, some are in a powder form, construction chemicals are there, sealants are there, additives are there. So it is very difficult. Packaging is also very different for that product. So very, very difficult to quantify the volume number for that.

Last positive from my side. what has...

Sorry to interrupt. Keshav, can you please use your handset because there seems to be some sort of disturbance in the line.

One last question from my side. What has been the CPVC price correction in quarter 2?

I think we have dropped close to about 7% to 8% in the market.

Okay. Because in Q1 call, you said that the prices are almost have bottomed out for CPVC because we have anti-dumping duty in place. So 7%, 8% sounds like a big number.

Yes. But because the problem was that the international level price drop. So the countries which are not falling under the antidumping duty, they started cutting the price, so Japan, Thailand, local manufacturer. U.S., they started cutting the price. So naturally, we have to also pass on to the market. And in a way, it's a good move because ultimately, it is going to shoot up the volumes in the coming time. The price will be affordable, then it will grow the market also. So in a way, it's a good move.

Yes, perfect. So price is not coming at the expense of margin, right?

No, no, no, margins are still stable. In spite of so much to drop, you see we have maintained 18% kind of band.

Yes, yes. Perfect. Yes.

So we are also slowly and gradually giving the price reduction to the market. If and when we are getting the support, we are giving it to them.

The next question is from the line of Praveen Sahay from Prabhudas Lilladher.

And many congratulations on a very good set of numbers. So the first is just a follow-up on the last participant question related to the CPVC pricing. So what is the reason? I can understand that the U.S. and Japan as the local players has reduced the price and ultimately the 7%, 8% reduction in the quarter. What is the basic reason. It is a demand-supply mismatch, which has led to the...

That's a -- raw material for CPVC is PVC. Now PVC, if it is bottoming out internationally at a $750 level, then one cannot expect CPVC to over at $2, $2.1 level, no, that delta should not be there. So when these raw material prices are falling, obviously, the derivative price is going to fall.

Okay. So what's your expectation for the way forward for CPV recent? Is it also a bottom out? Or is there a further room for a reduction in the prices as well?

I think it has almost bottomed out. Now we are not expecting further drop because PVC is almost -- after so many years, low is there, so we don't see that PVC will further go. I think we are at a pre-COVID level. So I don't see further drop in the CPVC or PVC.

And number can you give like what is the pricing of PVC resin right now?

So it varies from company to company because multiple companies are there. Every company's price is different.

Okay. Got it. The next question is related to the Adhesive business and especially the domestic business and where you had -- now that the hedge unit up and running. So how is the utilization label at the company level for the adhesive capacity?

At present, the utilization is good, but not -- we can even increase it to a good level. But with the hedges coming in, we'll have a good capacity and the utilization will obviously go down. But in chemical plants, you cannot keep adding like plant, one excluded every time. When you are building a plant, you must keep a vision of at least 10 years and built your plants because chemical plants are tough to keep erecting and adding. So in Dahej, we have gone with an atomization plant, a plant with good filling capacity, good production capacity. And also, we can make multiple chemistries out of it. And also, we are getting a good response of our epoxies in our exports also. We are seeing a good growth coming in the coming years from that market and also the Indian market. So the hit will add capacity to a substantial level, but it will also optimize the production cost, which is a plant which will be automized and running. Certainly, we are in certain chemistries going 1 to 2 steps backward, which will give an additional advantage of our raw material cost paid. So adding capacity or building capacity in the pipe business or the polymer business is something which is different. And in chemical business or in the adhesive business, it is something which is also different. But we are optimistic or we are sure that this capacity will help us to go long-income 4 to 5 years and even a little bit more than that.

Sorry, can you quantify as a percentage how much the capacity has increased with the time?

We cannot because in the -- in there there's a lot of things which are different. We have then to tell you this is the capacity in liters is the capacity in kgs. This is the capacity in because we have different products which are made and labeled in different metrics. There are liter there are kgs, there are gels, there are formation. So it's -- it is not like a pipe you convert a polymer kg or tonne into pipe, okay? But everything is kgs [indiscernible] and tonnes.

So Praveen, let me put it other way that whatever capacity is there right now, we can easily take our revenue of INR 2,000 crore kind of level, plus INR 2,000 crores plus level, yes.

Okay. Got it. And the next question and the last question is related to the Bathware segment. And there also, you had reached INR 28 crore per month of 100. So what -- can you give some more color on what mix of the premium or the economic segment right now you are setting? And also if you give some geographical color as well where...

All right. Now, geographical color is very difficult to give because we are now selling to almost all the states. And there are a few pockets in the east where we have yet to penetrate. But otherwise, our display centers have opened up in India. And with regards to your question, obviously, the premium product category will not sell automatically. People will first gain confidence in the brand and then use our lower end and mid-segment product. And once they are comfortable with the brand and they get positive response and they see positive response from the market after using that. I think then slowly and gradually more of the premium segment stuff will get sold.

And at what level of revenue you are expecting a breakeven here abate?

I think we have said that around INR 10 crores to INR 11 crores kind of run rate, we will be at breakeven but it can be a little bit here and there also because once you get some field from the market, now you keep changing your strategy. So like now we are getting a good response in certain geographies. So we have started doing some branding activity over there. So we have to monitor the market. And with the time we have to change our mindset. So we were also not expecting that in the month of September, we will do INR 8 crores. So -- but we did it. So I think we are not looking at breakeven, INR 1 crore here and there. We are having a vision of the next 10 years. So for that, even if the 1 quarter here and there breakeven is not going to affect the company when our vision is for the next 5 year.

Okay. Great. So correct. And when the Telangana and Kanpur is going to commission.

So like Telangana, we are targeting by June, and Canfor will be by March end. So Q1 of '26, you will see the production capacity up and revenue.

[Operator Instructions]. The next question is from the line of Akash Shah from UTI Mutual Fund.

I just want to understand, sir, what was the key reason behind 44% growth in other expenses on a Y-o-Y basis. So in this quarter, we saw 44% growth in other expenses. So...

So what happened that in many times, the event which we have worked out for the promotional activity or maybe a branding activity maybe 1 or 2 months here and there. So because of that event base some spend you have to do. So in this first half, the events are more so because of that, the branding cost and the promotional activity was higher because most of our adhesive beats dealers meet and the 5 meets were happened in the first half and preferably in Q2 more. So because of that, that spend has jumped up very fast. So you can see in the coming half, this event will not be there. So that this event will not be there so the expenditure will come down in the second half. But our annual budget, what we have allocated to particular things will not go in to change. So it happened that on a quarter-on-quarter basis, it is very difficult to even out. But on a 12-month basis, it's definitely even now. That's why other expenditures are very high. And similarly, you can see the employee cost is also very high because we have appointed a lot of new senior management people within our team for the sanitary website also. And for the, you can say Adhesive side also 5 also, we have added the senior people. So their cost is not absorbed because once it even out in 12 months, it will be absorbed. So on a yearly basis, again, you will see the employee cost will not be that high. But right now, because of the lower half, historically, first half is 45% of the revenue in the second half is 55% of the revenue. So once it will be even out in 12 months, I think will not be that high of average.

Sure, sir. And what would be the advertisement spend for the whole year or end this quarter?

We stick to whatever guidance we have been giving since when we started doing our advertisement. We do about 1.5% to 2% spend on branding and promotional activity, like always, we have done.

Sure. And sir, in the hedge, what would be -- I mean, so the facility, what would be the revenue potential of that facility?

Price hedge. The hedge should contribute to minimum of INR 800 crore, INR 2,000 crore kind of revenue.

The next question is from the line of Dhananjai Bagrodia from ASK.

[Indiscernible]. wonderful execution again. I wanted is we have grown 28%, what would have been roughly industry growth at the same time?

I think it is very difficult to say industry growth because other companies' numbers are still not out. So it is too early to say what was the industry growth. But whatever our internal working sale that we should be -- we must have grown the market share in this quarter. So we have gained the market share in this quarter. But of course, actual number one will be out from all the other players, we will exactly will come to know.

So I can add to whatever Hiranand said, that if you look at our H1 FY '21 to H1 FY '24, 4-year CAGR as far as that grows, we are delivering at a 20.5% 4-year H1 CAGR. I think we are outperforming in the -- most of the industry's branded players by a long shot, and we have almost doubled our tonnage in 4 years, H1 to H1. So I think we are very comfortable with that type of tonnage growth we are seeing, and we remain bullish with our guidance to close the year also at a 20% plus tonnage growth level.

Okay. Sure. And just maybe a question, what did you say margins were in India and U.K. in the design?

So India was 15.5% and U.K. was 10%.

Okay. Congratulations for earlier.

The next question is from the line of Mr. Achal Lohade from JM Financial.

Just 2 questions. One is with respect to the DWC pipes. In terms of contribution, how large is that and most importantly, what I wanted to understand also is that has the REX played the way you thought at the time of acquisition? Or it has been kind of a little laggard?

So DWC is a significant business for us and looking at what the infra spend numbers and reports are coming out. Yesterday only I was reading that India will spend more than INR 143 trillion for infra work in the coming 5 years. It's a very positive sign for a product like double-wall corrugated pipe. And the acquisition has played out well for us. Obviously, we don't give segmental-wise numbers, but we are doing very good volume growth in our double wall corrugated pipes. And we see this going in the same run rate for the next couple of years. So I don't see any much slowdown. Actually, we are -- most of the places our capacities are running at almost full level.

I can add further to what Kairav said that you don't look REX as an independent company. But in the reg premises, we have started manufacturing the other pipes also. So that business is also picking up very fast. So that is also giving us a good support from that location. So that is also adding to our growth as well as our margins.

Understood. And have you also been beneficiary of the spending, which is happening in the Astral D Rex program in terms of -- and which segments, is it in only DWC -- or is it in...

So sir, DWC is usually not there in Astral D Rex program because Astral D Rex is a freshwater drinking water supply scheme. So double-wall corrugated pipes are used for drainage application. So double-wall corrugated pipe application is very different from the type of pipes that are used in Nal se Jal. So Nal se Jal predominantly uses HDP and pressure agri pipes in their scheme. And we have taken some Astral D Rex orders, but that has all been done at the local level by our distributors. We do not deal directly with the scheme. Our local distributors, if they get an Astral D Rex order, they take that order, we support them.

Got it. And if you could also give some heads up on the storage tank as to how it is building up like you talked about Bathware, you're looking at a INR 10 crore in the next couple of months. So how is the run rate for storage tanks now -- and what...

I think we have stopped giving individual numbers in the beginning of the new product journey, we share that number. But at a later stage, we don't share because unnecessary, we don't want to create unhealthy things in the market. So we normally don't see that way because sentencing all or the new segment, that's why we are saying over a period of time, we will not be sharing the individual number into that segment also. Ultimately, we want to keep it this confidential. Unnecessary, everyone will pat each other the competitors also, so which we don't want things to happen. But I can say think is giving us an excellent number, whatever we originally planned, we are going ahead of what we originally planned. So from that, you can understand the growth is going beyond what we have originally planned.

Actually, tank is where the brand play comes in because Astral is a very strong brand. Whenever people want to buy the water tank, they look at the label Astral on the tank and immediately, the sale happens. So hence, we are commanding a premium in the market. We are selling at our pricing, and yet we are selling good numbers of tank, and we are very bullish and that is why whenever we launch a new facility, the first product we manufacture is tanks.

Lovely. Sir, just one clarification. Your tanks and both the DWC pipes, they would be better margin than the blended margin, what you're reporting. Is that a fair understanding?

So tanks will be closed through our piping margin, initially was not there, but now with this growth in the volumes, it will be closer to our pipe margin. DWC will be, I think, a couple of percentage lesser than the normal part.

Wish all the best.

The next question is from the line of Sneha Talreja from Nuvama.

Congratulations for [indiscernible] numbers. Just 2 questions from my end. I just wanted to understand that the plant in position. Is there other at implementation things and everything settled? And secondly, more on to that, what kind of synergies are you seeing in that particular business with respect to [indiscernible], have we started receiving benefits? Or what's the vision here with respect to the synergies between both in paint and additives, which you used to point out at the time of acquisition.

Still we are working on the back office side and the plant levels and all. Still, our team has not yet taken the charge on the front side that is on the sales and marketing side because we said that we are going to complete the 80% acquisition in this month I think once that 80% will be completed, then our team will be taking front roll in the sales and marketing. And then in a period of time, we will keep communicating to the market whatever we feel that it is necessary to communicate to the market. A lot of synergies are there, a lot of things are there. Otherwise, we should not have entered into that business. So we are seeing a lot of synergy with the ASUs and a lot of synergy with the pipe side also on the project business and all. So -- but this all will be unlocked over a period of time. I think it will be too early at this stage to communicate that we are going to build, we are going to do that. We don't want unnecessary crude close the Griffin in the market. So at the right time, we will definitely go into company set to the market.

Understood, sir. And secondly, sir, for particular quarter, will some inventory levels moving up. Any specific reason for that? And do we expect a trouble because of inventory, I mean, PVC prices have been coming up [indiscernible] in a very short time. So is that inventory related to PVC or how is that pace will be happy to...

Major inventory related to the CPVC because our company is more of CPVC driven. Secondly, you should also understand that we are growing at a 50% volume. And that so in our top season. First half, I said that which is 45,000. Our seasonal ones are going to start now. So we have to start sourcing the inventory little in advance. So I think it's not going to give us a much pain in the coming time because CPVC is not going to fall further from here on. That is what we are expecting. Of course, we are not expert into that side, but we are of the view that our seasonal months are starting. And secondly, we know that a lot of our dealers and distributors have done destocking in the month of September because everyone was expecting that the prices to go down. So because of that, also a little higher inventory there, but I think that will be sold out in the month of October itself. And we are expecting this month also similar to what we have done in H1. So it should not be the problem for inventory. It will come down immediately in the month of October.

The next question is from the line of [ Pinaki Banerjee ] from HomeCapital Private Limited.

I actually have a couple of questions. So all the CapEx which will be coming on at the beginning of next financial year, how much growth are you expecting in FY '25?